RateGain Travel Technologies IPO: All You Need To Know
RateGain Travel Technologies Ltd. will launch its three-day initial public issue on Tuesday to raise fresh equity and allow partial exit to promoters and selling shareholder Wagner Ltd.
The IPO amounts to Rs 1,335.70 crore at the upper end of the price band of Rs 405-425 apiece, the service provider to global travel and hospitality industry said in its red herring prospectus.
The issue constitutes 29.44% of the post paid-up equity share capital. The promoters will hold 56.2% in the company after the share sale.
Issue date: Dec. 7-9.
Fresh issue: Rs 375 crore.
Offer for sale: Rs 960.70 crore.
Market value at the upper end of the price band: Rs 4,536.7 crore.
Face value: Re 1 apiece.
Lot size: 35 shares and multiples.
Listing: NSE and BSE.
Lead managers: Kotak Investment Banking, IIFL Securities, Nomura.
In August last year, the company had issued options to employees at a fair value of Rs 136.89 apiece and share price on grant date of Rs 147.63 apiece. That’s prior to a stock split of Rs 10 face value to Re 1 each, and a bonus issue of 11 shares for every one held.
Adjusted for the stock split and bonus, the fair value and share price on grant date stands at Rs 1.14 and Rs 1.23 apiece. Shares offered in the IPO at Rs 405-425 apiece is adjusted for the stock split and bonus.
Where Will The Money Go?
Proceeds from the fresh issue will be used to:
Repay loans availed by subsidiary RateGain UK from Silicon Valley Bank: Rs 85.26 crore.
Payment of deferred consideration for DHISCO acquisition: Rs 25.20 crore.
Strategic investments, acquisition and inorganic growth: Rs 80 crore.
Investment in technology innovation, AI and other organic growth initiatives: Rs 50 crore.
Capex for data centre: Rs 40.77 crore.
RateGain is among the leading distribution technology companies globally and is the largest software-as-a-service company in the hospitality and travel industry in India.
It offers travel and hospitality solutions to hotels, airlines, online travel agents, meta-search companies, vacation rentals, package providers, car rentals, rail, travel management companies, cruises and ferries, among others.
The company is also the largest aggregator of data points in the world for the hospitality and travel industry. It has three lines of business:
DaaS: It provides data-as-a-service to clients, enabling them with market intelligence and dynamic price recommendations.
Distribution: This includes availability, rates, inventory and content connectivity between accommodation providers and their demand partners. Distribution also enables delivery of reservations back to hotel systems to ensure smooth operations and accurate reporting by hotels. Nearly 50% of the revenue comes from distribution.
Marketing: Its MarTech offering enhances brand experience to drive guest satisfaction, increase bookings and increases guest loyalty. It also manages social media for luxury travel suppliers, allowing them to be responsive to social media engagements as well as effectively manage their social media handles and run promotional campaigns.
RateGain has been loss-making in the last two fiscals as well as in the five months ended August of FY22.
The company has no listed peer in India.
The Covid-19 pandemic has had a significant adverse effect on business and operations, and its future impact is uncertain. With the latest Omicron strain, the company is seeing its clients being cautious and cancellations.
Business depends on customers renewing their contracts and the company expanding sales to existing customers. Any decline in customer contract renewals or expansion or any impairment of long-term relationships with customers would adversely affect business.
If the company is unable to attract new customers in a manner that is cost-effective and assures customer success, then business would be adversely affected.
It derives, have derived and expects to continue to derive, substantial majority of revenue from contracts in relation to distribution products. Any failure of distribution products to satisfy customer demands, achieve increased market acceptance or adapt to changing market dynamics would have adverse effect.
It may not derive the anticipated benefits from strategic investments and acquisitions and it may not be successful in pursuing future investments and acquisitions.
It derives a significant portion of revenue from operations from a limited number of markets and any adverse developments in these markets could adversely affect business.